[Click eStock] "Global Market Sideways... Big Tech Sector to Outperform on Rebound"

Following a sharp decline in stock prices earlier this month and the stock market entering a sideways phase, securities analysts have suggested a strategy of preemptively buying sectors that are expected to outperform (exceed market returns) during the upcoming rebound. The recommended sectors include big tech (large information technology companies).

On the 22nd, Hanbi Oh, a researcher at Shinhan Investment Corp., stated, "In the next month and October, it is possible to select sectors that lie at the intersection of two conditions?high interest rate sensitivity and existing market leadership?and invest in those sectors in advance to outperform when the rebound fully begins."

She added, "Looking at past sharp decline events, a common characteristic of the rebound phase following a sideways period is that, in the short term (one month after the bottom), sectors with high interest rate sensitivity and existing leading sectors simultaneously rebound reflecting a shift in monetary policy. Then, as the influence of interest rates quickly fades, the market narrows down to an outperformance phase led mainly by the existing leading stocks over time."

In fact, after the recent stock price crash, the stock market showed a faster recovery than expected. The S&P 500 and Nasdaq are only 1.2% and 4.5%, respectively, away from recovering their previous highs. This is due to economic indicators easing recession concerns and the Bank of Japan's (BoJ) verbal intervention partially calming the yen's strength. However, despite the index recovery, the market tone remains unclear, making it difficult to build sector strategies.

Researcher Oh said, "Sectors that meet the conditions of high interest rate sensitivity and existing market leadership, and also have solid earnings, include semiconductors, media and entertainment, consumer discretionary retail, and information technology (IT) hardware and software?ultimately summarized as 'big tech'." She emphasized, "The important factor is timing the purchase. Attention should be paid to the Jackson Hole meeting on the 23rd and Nvidia's earnings announcement on the 28th."

She also noted, "From the perspective of timing the purchase, one can focus on the 'moving averages.' Currently, the alignment of moving averages is broken, and buyers and sellers, profits and losses are mixed, so it may be difficult to bet on an immediate upward trend. If anticipating a scenario where leading stocks return to their previous trend, the convergence of short- and long-term (20-day, 50-day, 100-day) moving averages could be the right time to increase exposure," she added.